news | 13 September 2021

U.S. Department of Defense Launches National Security Innovation Capital With $15M Congressional Appropriation

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New Program Helps Dual-Use Hardware Startups Accelerate Product Development for National Security and Economic Competitiveness

MOUNTAIN VIEW, California – The Department of Defense has added a key new element to its range of efforts designed to stimulate and access technology innovation in the private sector. National Security Innovation Capital (NSIC) is a program that addresses the shortfall of trusted funding from private venture capital sources for the development of new hardware technologies that have both commercial and national security applications.

The NSIC team identifies startups across the country which are developing such dual-use technologies and which would benefit from government funding to develop their products and bring them to market. NSIC funding allows such companies to accelerate their product development plans and reduce inherent technical risks. NSIC funding and engagement attract additional private capital, further accelerating company progress to product launch. 

“In just six months, NSIC created and launched this new program to support startups developing hardware technologies critical to national defense and economic competitiveness, while stimulating additional funding from the private sector and blocking future investment from untrusted sources,” said NSIC Director Tex Schenkkan. “NSIC is an important new effort  in expanding public-private partnerships to strengthen the national security innovation base.”

Since its formation in February 2021, NSIC has awarded prototype development contracts to companies in multiple technology areas. Examples include: 

  • Xplore is developing a high-power, ride-share capable spacecraft providing the infrastructure to execute missions from low Earth orbit, to the Moon, and across cislunar space, for commercial, scientific, and national security end-users.

  • NFA is developing a new rocket engine design intended for hypersonic vehicles.

  • FuelX is developing a manufacturing process that produces a material for the safe storage and transportation of hydrogen.

  • AML, a company creating a manufacturing process that will result in a domestic source of novel high-performance magnets.

  • A company to be announced soon which is building a domestic manufacturing facility to produce qualification cells based on a next-generation battery chemistry. 

The above companies are located across the country -- South Carolina, Texas, Florida, Washington and California.

NSIC was authorized in the National Defense Authorization Act of 2019 in response to concerns that U.S. hardware startups were having trouble finding adequate capital from trusted U.S. sources. Less than 30% of private U.S. venture capital is invested in hardware companies, and less than 10% of that is invested at early stages where it’s most needed. In many cases, hardware startups were having to turn to foreign sources of capital which left the startups vulnerable to the loss of their intellectual property to potential adversaries. 

NSIC is a part of the Department’s innovation ecosystem led by the Defense Innovation Unit (DIU).  Its streamlined contracting process leverages the Other Transaction Authority already granted to and utilized by DIU.

“NSIC is an important part of accelerating emerging commercial technology into the DoD,” said Michael Brown, DIU Director. “Funding innovative dual-use technology to improve national security is critical in our nation’s strategic competition with China and providing the best technology for our military.”

About National Security Innovation Capital

National Security Innovation Capital (NSIC) is a new DoD initiative that enables dual-use hardware startups to advance key milestones in their product development by addressing the shortfall of private investment from trusted sources. We award Other Transaction (OT) agreements to accelerate company productization efforts. NSIC is a key part of the Defense Innovation Unit’s programs to accelerate the adoption of commercial technology into the Department.  For more information, go to

NOTE: NSIC is temporarily suspending its review and evaluation process since currently available funds will be fully committed.